Most Read

Kokusai Electric (6525 JP) could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.
The Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) has been dropping over the last few days and is 8.6% lower over the last 8 trading days.
Kokusai Electric (6525 JP) has been trading higher on expectations of index inclusion in August, but that could move to November now.

Zhihu (ZH US/2390 HK): Negative EV Play Launches a Share Buyback at HK$9.11/US$3.50

Zhihu Technology (ZH US) has launched a conditional share buyback offer to acquire a maximum of 46.9m Class A ordinary shares (15.93% of outstanding shares) at HK$9.11 (US$3.50 per ADS).
The offer is conditional on shareholder approval by a majority of votes cast at the EGM. There is no minimum acceptance condition. The EGM vote is done due to irrevocables.
Zhihu’s share buyback returns 19% of cash not subject to government controls, below Douyu International Holdings (DOYU US)’s comparable 34%. The minimum pro-ration is expected to be around 34%.

The Naspers/Tencent & Prosus/Tencent Stub: Entry Levels so Attractive It Looks Too Good to Be True

By Charlotte van Tiddens, CFA

Discounts likely set for a re-rating as market continues to overreact to appointment of CEO amid good set of results.
The discounts of both Naspers and Prosus have continued to widen since the appointment of Fabricio Bloisi to Group CEO was announced in May (effective 10 July).
At the end of June, the group released its strongest set of results in years, delivering on consolidated ecommerce profitability ahead of target.

(Mostly) Asia-Pac M&A: AIS/Thaicom, Capitol Health, Alumina, Ansarada, TCM, CPMC, Fancl, Hollysys

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed this week on Smartkarma: Samson Holding (531 HK)‘s Scheme, and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB).
Key updates took place on Capitol Health (CAJ AU), Alumina (AWC AU), Ansarada (AND AU), TCM (570 HK), CPMC (906 HK), Fancl (4921 JP),and Hollysys Automation Technologies (HOLI US).

Weekly Deals Digest (21 Jul) – Intouch/Gulf, China TCM, Huafa, Samson, Zhihu, Asics, Kokusai, Timee

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: ASICS Corp (7936 JP) and Kokusai Electric (6525 JP) placements; Sanil Electric (062040 KS) and Timee Inc (215A JP) IPOs.
Event-Driven developments China Traditional Chinese Medicine (570 HK), Huafa Property Services Group (982 HK), Samson Holding (531 HK), Zhihu Technology (ZH US), Intouch Holdings (INTUCH TB), Gulf Energy Development (GULF TB).

ENEOS Extends Tatsuta Electric (5809) Tender Offer Means They Don’t Have The Shares

ENEOS Holdings (5020 JP) announced its deal for affiliate Tatsuta Electric Wire & Cable (5809 JP) 18-plus months ago. China approvals held it up more than a year.
Last month, they launched. The sector was up a lot. TOPIX was up a lot. The stock had recently been trading through terms. But ENEOS didn’t bump the price.
A month later, and the tender was supposed to have closed Friday 19 July. It didn’t. ENEOS extended, for no reason, which suggests they don’t have the shares.

Merger Arb Mondays (22 Jul) – China TCM, GA Pack, Huafa, Samson, CPMC, Fancl, Tatsuta, Capitol

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Asia Cement China (743 HK), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK).
Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Fancl Corp (4921 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP), Hollysys.

Examining Market Interest in the Potential Samsung C&T and SDS Restructuring

Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

GAPack (468 HK): Grinding Towards a Stalemate

Since announcing Shandong Xinjufeng Technology Packaging (301296 CH)’s pre-conditional voluntary offer for Greatview Aseptic Packaging (468 HK) at HK$2.65 per share, the gross spread has increased.
The Board’s strategy is to rally shareholders against a hostile offer. However, the recent AGM protest votes suggest that the Board cannot easily thwart the offer.
Shandong Xinjufeng’s renewed efforts to secure Board representation suggest that its offer is in trouble. Meanwhile, China Mengniu Dairy Co (2319 HK) seems disinclined to engage in a bidding war.

TSMC. Take The Pullback Gift

By William Keating

TSMC guided Q324 revenues of $22.8 billion at the midpoint, up 9.5% QoQ and up 32% YoY
Increased full year guidance to be above mid-20% YoY growth in US dollar terms
Share price has declined ~14% from its 52 week high but still up >2x from its 52 week low. Many will view this pullback as a gift, we certainly do…

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Jul 21

Most Read: Honda Motor, Red 5 Ltd, Kokusai Electric , Zhihu Technology, CK Infrastructure Holdings, Brilliance China Automotive, Thai Beverage, Fancl Corp, Nikkei 225 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Big Honda (7267) Offering – Flow Timing Matters
S&P/ASX Index Rebalance Preview: Potential Changes from Now to September
Kokusai Electric (6525 JP): The Current Playbook
Zhihu (ZH US/2390 HK): Negative EV Play Launches a Share Buyback at HK$9.11/US$3.50
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 19)
Over Capacity in Chinese Auto Market
Consumer Tales & Trends #July 11-20: THBEV SP Swap Deal, Bad Debts in Thailand, AI in Beauty.
(Mostly) Asia-Pac M&A: AIS/Thaicom, Capitol Health, Alumina, Ansarada, TCM, CPMC, Fancl, Hollysys
EQD | Where/When Will the Nikkei Index Reach a Bottom And Bounce?
Last Week in Event SPACE: Gulf Energy/Intouch, CK Infra, Zhongsheng, Thai Beverage, Fraser & Neave

Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

S&P/ASX Index Rebalance Preview: Potential Changes from Now to September

With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX).
The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.

Kokusai Electric (6525 JP): The Current Playbook

Since the US$2.0 billion secondary placement announcement, Kokusai Electric (6525 JP)’s shares are down 5.6% from the undisturbed price of JPY5,520 per share (8 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Kokusai’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 22 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Zhihu (ZH US/2390 HK): Negative EV Play Launches a Share Buyback at HK$9.11/US$3.50

Zhihu Technology (ZH US) has launched a conditional share buyback offer to acquire a maximum of 46.9m Class A ordinary shares (15.93% of outstanding shares) at HK$9.11 (US$3.50 per ADS).
The offer is conditional on shareholder approval by a majority of votes cast at the EGM. There is no minimum acceptance condition. The EGM vote is done due to irrevocables.
Zhihu’s share buyback returns 19% of cash not subject to government controls, below Douyu International Holdings (DOYU US)’s comparable 34%. The minimum pro-ration is expected to be around 34%.

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 19)

By David Mudd

Equity ETF flows in China continued to lead Asia as the “National Team” in China supports market levels during the 3rd Plenum.
CK Infrastructure Holdings (1038 HK) , Genscript Biotech (1548 HK) and BOC Aviation (2588 HK) saw positive news sentiment and share price movements for the week.
Jiumaojiu (9922 HK) , Aluminum Corporation Of China (2600 HK) and China Hongqiao (1378 HK) saw negative news sentiment and share price drops for the week.

Over Capacity in Chinese Auto Market

By Alex Ng

News show that European car makers such as BMW is moving out of China, leaving the Auto market to the local players
Stocks like Brilliance China will suffer losses as they lose some of the most famous co-brand.
Foreign firm exits may give relief to local auto makers as it resolves part of the over-capacity problems

Consumer Tales & Trends #July 11-20: THBEV SP Swap Deal, Bad Debts in Thailand, AI in Beauty.

By Devi Subhakesan

Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
Thai Beverage (THBEV SP)‘s proposed swap deal with promoter company raises several questions for shareholders. Start with the back story about how Fraser And Neave (FNN SP) joined the group.
Bigger weddings could become a trend in India – Read why we like Kalyan Jewellers(KALYANKJ IN) . Also, household debt in Thailand as % of GDP is highest in ASEAN.

(Mostly) Asia-Pac M&A: AIS/Thaicom, Capitol Health, Alumina, Ansarada, TCM, CPMC, Fancl, Hollysys

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed this week on Smartkarma: Samson Holding (531 HK)‘s Scheme, and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB).
Key updates took place on Capitol Health (CAJ AU), Alumina (AWC AU), Ansarada (AND AU), TCM (570 HK), CPMC (906 HK), Fancl (4921 JP),and Hollysys Automation Technologies (HOLI US).

EQD | Where/When Will the Nikkei Index Reach a Bottom And Bounce?

By Nico Rosti

The Nikkei 225 INDEX pulled back last week, and it may continue to fall for another 1-2 weeks.
Make sure you read the Market Reversal Matrix – Charts Analysis section below: we are introducing a possibile new Premium Service using our trend prediction models in algorithmic trading format.
The price support area to buy the Nikkei 225 would be between 39800 and 39300, this coming week (or the next).

Last Week in Event SPACE: Gulf Energy/Intouch, CK Infra, Zhongsheng, Thai Beverage, Fraser & Neave

The Gulf Energy (GULF TB)/Intouch (INTUCH TB) merger is an opportunistic, bullying method designed to have GULF shareholders buy INTUCH and therefore AIS (ADVANC TB) at too low a price.
CK Infrastructure Holdings (1038 HK)‘s interest in a possible London listing coincides with the LSE undergoing a listing regime change.
Management continue to creep their stake in Zhongsheng Group (881 HK), and now hold a shade under 50%.

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Jul 20

Most Read: Honda Motor, Pylon Technologies , Kyoto Financial Group , Dell Technologies , Capitol Health, Thai Beverage, Kokusai Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Big Honda (7267) Offering – Flow Timing Matters
Kokusai Electric Placement Updates – Misbehaving
Quiddity Leaderboard STAR 50 Sep 24: Final Ranks; Some Question Marks over Ninebot Re-Inclusion
Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)
Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now
S&P 500 September Forecasts: Saved by the Dell?
Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): An Improved Image – Now Firmed
Thai Bev to Get F&N Stake from Promoters At Book Value than Fair Market Value
Kokusai Electric (6525 JP): The Current Playbook
Launch of Korea Value Up Index in September

Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

Kokusai Electric Placement Updates – Misbehaving

KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP).
We have looked at the lockup expiry and deal dynamics in our earlier notes.
In this note, we talk about share price performance since then.

Quiddity Leaderboard STAR 50 Sep 24: Final Ranks; Some Question Marks over Ninebot Re-Inclusion

By Janaghan Jeyakumar, CFA

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)

Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%.

Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

By Victor Galliano

Kyoto Financial’s stakes in three key listed Japanese corporates are valued at over 85% of its market capitalization with its total equity holdings accounting for 130%+ of its market capitalization
Kyoto management intends to retain the bulk of the bank’s equity holdings, opposing the growing trend for Japanese listed companies to unwind crossholdings; management will review this policy in November
In the near term, we see no major catalyst for Kyoto to accelerate its equity holdings unwind and so, combined with its underwhelming fundamentals, we are negative on Kyoto Financial

S&P 500 September Forecasts: Saved by the Dell?

By Dimitris Ioannidis

Dell Technologies (DELL US) is the main candidate for addition-transition with uncertainty arising from the ‘Multiple Share Classes’ criterion. Forecasted demand is ~$7bn and ~4 ADV.
Williams Sonoma (WSM US) is one of the top candidates for addition-migration with uncertainty due to the migrations’ inconsistent market cap selection pattern. Forecasted demand is $840m and ~2.6 ADV.
American Airlines Group (AAL US) is one of the main candidates for deletion with uncertainty due to price hence ranking fluctuations until cut-off. Forecasted supply is $290m and ~0.8 ADV.

Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): An Improved Image – Now Firmed

Back on the 17th June, diagnostic imaging provider Capitol Health (CAJ AU) announced it had entered into a process deed with Integral Diagnostics (IDX AU). Terms are now firmed.
IDX will issue 0.12849 new IDX shares for each Capitol share. Scrip terms are unchanged from that announced previously. Upon completing the transaction, Integral would hold 63% in the NewCo.
Apart from ACCC signing off, this transaction looks priced to complete.

Thai Bev to Get F&N Stake from Promoters At Book Value than Fair Market Value

By Devi Subhakesan

Thai Beverage(THBEVSP)‘s proposed swap deal involves acquiring a 41.3% stake in F&N from promoters, seemingly at book value than fair market value, expected in case of an arms length transaction.
Fraser And Neave (FNN SP) holds a 20.3% stake in Vietnam Dairy(VNM VN), Vietnam’s leading dairy player, which is now trading at nearly a 40% discount to the investment value.
Understanding TCC Assets’ ownership history of F&N may help clarify the deal’s valuation rationale.

Kokusai Electric (6525 JP): The Current Playbook

Since the US$2.0 billion secondary placement announcement, Kokusai Electric (6525 JP)’s shares are down 5.6% from the undisturbed price of JPY5,520 per share (8 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Kokusai’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 22 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Launch of Korea Value Up Index in September

Korea Value-Up index is finally expected to be launched in September 2024 which is likely to include at least 100 companies in KOSPI and KOSDAQ.
There are expectations that Korea’s Value Up index could resemble JPX Prime 150 index which is a Japanese version of the value up index launched last year.
We provide 70 stocks in Korea that could be included in the Korea Value Up index. These 70 stocks could outperform the market in the next several months.

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Jul 19

Most Read: Aisin , Hygeia Healthcare Group, Kokusai Electric , KT Corp, Honda Motor, Samson Holding, Huafa Property Services Group, Thai Beverage, Advanced Info Service, Capitol Health and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc
Hong Kong: Stocks Facing the Passive Boot in August
Kokusai Electric Placement Updates – Misbehaving
Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level
Big Honda (7267) Offering – Flow Timing Matters
Samson (531 HK): MBO Via A Scheme
Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote
Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive
GULF/INTUCH Merger & ADVANC/THCOM VTO’s
Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)

Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc

Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

Hong Kong: Stocks Facing the Passive Boot in August

There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.

Kokusai Electric Placement Updates – Misbehaving

KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP).
We have looked at the lockup expiry and deal dynamics in our earlier notes.
In this note, we talk about share price performance since then.

Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

KT’s foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT’s 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.

Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

Samson (531 HK): MBO Via A Scheme

Furniture trader Samson Holding (531 HK) has announced a Scheme from Shan Huei Kuo, Samson’s Chairman.
The Cancellation price is $0.48, a 50% to last close. The premium is more pronounced if going back a month. The price is final.
This looks done. But Samson is an illiquid micro cap.

Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote

Huafa Property Services Group (982 HK)’s IFA opines that Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. The offer price is final.
No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%.

Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive

By Devi Subhakesan

Thai Beverage(THBEV SP) has proposed a share swap-deal with a promoter company to acquire additional stake in FraserAnd Neave(FNN SP) in exchange for Frasers Property at negotiated valuations, not market prices.
Post-Completion of the swap deal with the promoter-owned entity, which requires shareholder approval, Thai Bev will hold a 69.6% stake in F&N and no stake in Fraser Property (FPL).
If the stake swap were valued at yesterday’s closing share prices, it would imply a drop in the total stake value for Thai Bev after the proposed deal.

GULF/INTUCH Merger & ADVANC/THCOM VTO’s

In 2021, Gulf Energy Development (GULF TB) made an offer to acquire all Intouch Holdings (INTUCH TB) shares at THB65/share. Singtel (ST SP) did not tender their then 21% stake.
Now Gulf Energy Development (GULF) and Intouch Holdings (INTUCH) are looking to merge and that will result in VTO’s for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB).
The merger will result in an inclusion to the SET 50 Index in the first quarter of 2025. There is the December rebalance before that.

Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)

Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%.

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Jul 18

Most Read: Honda Motor, Hygeia Healthcare Group, Intouch Holdings, Red 5 Ltd, Hyundai Motor India , Timee Inc, Hyundai Glovis, SK Innovation, Koito Manufacturing and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Honda (7267) Offering – Much Easier Than It Looks
Hong Kong: Stocks Facing the Passive Boot in August
Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”
S&P/ASX Index Rebalance Preview: Potential Changes from Now to September
Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out
Timee IPO: Forecasts and Valuation
Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
GULF-INTUCH Amalgamation
SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.

The Honda (7267) Offering – Much Easier Than It Looks

At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

Hong Kong: Stocks Facing the Passive Boot in August

There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.

Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”

Last night, the Board of Intouch Holdings (INTUCH TB) announced an amalgamation with Gulf Energy Development (GULF TB) and Tender Offers for Advanced Info Service (ADVANC TB) (at THB 216.30)
And Thaicom Pcl (THCOM TB) (THB 11.00) shares. This is really big news. It appears to try to cap years of re-arrangement of the capital structure. It’s complicated.
But it is not fair. INTUCH shareholders lose 22% of earnings value per investment value in 2024. 20% in 2025. But, there may be a way to block it…

S&P/ASX Index Rebalance Preview: Potential Changes from Now to September

With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX).
The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.

Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out

By Shifara Samsudeen, ACMA, CGMA

Hyundai Motor (005380 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
In our previous note, we looked at the company’s past performance. In this note, we undertake a peer comparison.

Timee IPO: Forecasts and Valuation

Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”

Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

GULF-INTUCH Amalgamation

By Waraporn Wiboonkanarak

The amalgamation will entail the ratios for allocations of shares in the NewCo to the shareholders of GULF and INTUCH as detailed below.
The amalgamation process and the establishment of the NewCo are expected to be completed in 2Q25.
The restructuring is aimed at reducing duplication in the shareholding structure and facilitating growth opportunities in the energy, infrastructure, and digital businesses.

SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio

The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.

Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.

An interview in the Nikkei of Koito Manufacturing (7276 JP) CFO Takahito OTAKE offered the comment that Koito Mfg expected a shareholder return of 130% a year through March 2029.
The stock popped 19% after lunch on that comment, then fell back to end up 5.0%.
This is the same pop as we saw end-March. Then it was +24.6% and it stayed up the next day. Same reason for the pop. This was an echo.

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Jul 17

Most Read: China Traditional Chinese Medicine, TIS, Doosan Robotics , Honda Motor, Samson Holding, Gigabyte Technology, PC Partner and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
Japan – Yet Another Big Round of Passive Selling Expected in August
Doosan Group: Index Implications of the Corporate Restructuring
The Honda (7267) Offering – Much Easier Than It Looks
Honda (7267 JP): The Current Playbook
Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48
Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave
Further “SGX Listing & HKEx Withdrawal” Musings

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress

By Xinyao (Criss) Wang

The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%.
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition.
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.

Japan – Yet Another Big Round of Passive Selling Expected in August

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Doosan Group: Index Implications of the Corporate Restructuring

The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.

The Honda (7267) Offering – Much Easier Than It Looks

At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

Honda (7267 JP): The Current Playbook

Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48

Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively.
The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.

Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction

A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
The possibility of such a selldown was flagged by Reuters prior to the deal launch.
In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.

Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave

By Clarence Chu

Gigabyte Technology (2376 TT) is looking to raise up to US$350m in its upcoming GDR offering. The firm is also looking to raise another US$300m via convertible bonds.
In late Jun 2024, Gigabyte announced that it had received its shareholder’s approval to issue between 32-38m common shares via a GDR offering.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Further “SGX Listing & HKEx Withdrawal” Musings

Back on the 18th June, personal computer parts and accessories play PC Partner (1263 HK) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
This development was discussed in PC Partner (1263 HK) Muses SGX Listing & HKEx Withdrawal. PC Partner subsequently announced a privatisation would not accompany any proposed withdrawal (should it happens).
My recent discussions with SFC confirms this is possible. And there was a recent precedent. But there may be caveats.

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Jul 16

Most Read: ASICS Corp, China Traditional Chinese Medicine, MMG, Eoptolink Technology , TIS, Korea Stock Exchange KOSPI 200, Legend Biotech Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying
ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact
China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
Japan – Yet Another Big Round of Passive Selling Expected in August
Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives
Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress

By Xinyao (Criss) Wang

The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying

15 shareholders are looking to sell between 73.9-85m shares (US$1.2bn-US$1.38bn) of ASICS Corp (7936 JP) in a secondary offering that will likely be priced on 23 July.
ASICS Corp (7936 JP) has also announced a huge upward revision to its sales and profit forecasts with EPS expected to increase 61% from earlier estimates.
Passive buying will be extremely limited in the short-term with the downward pressure offset to a large extent by the sales and earnings revisions.

ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact

A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
For the two large banks, this will be a cleanup of their cross-shareholding.
In this note, we will talk about the placement and run the deal through our ECM framework.

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%.
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition.
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.

MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion

Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown

There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.

Japan – Yet Another Big Round of Passive Selling Expected in August

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives

Nine companies disclosed value-up plans, with four official and five pending disclosures. Initially, these announcements boosted stock prices, but long-term correlations were inconclusive. Yet, shareholder returns notably rose in H1.
NPS increased stakes in three of the nine recently announced value-up companies. They share traits in value-up trading (large caps & low PBR), potentially guiding our strategy as NPS enters.
BlackRock’s Hong Kong branch has recently engaged with six Korean asset management firms for potential entrustment of its Asian fund’s Korean investment portion, focusing on the value-up policy.

Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

Legend Biotech Corp (LEGN US) shares increased 12% on Friday as a Street Insider report claimed it received takeover interest and hired Centerview Partners to help review the offer.
Genscript Biotech (1548 HK), the largest shareholder, shares rose 25%. Genscript responsded that it is not aware of any reasons for these share price movements and any inside information.
The chances for an offer are low as the offeror would face several hurdles. Nevertheless, without an offer, the upcoming CARVYKTI commercial production in 2H24 will support the share price.

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Jul 15

Most Read: ASICS Corp, China Traditional Chinese Medicine, MMG, Hyundai Motor India , POSCO Holdings, Timee Inc, Eoptolink Technology , CK Infrastructure Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
ASICS (7936 JP): A US$1.4 Billion Secondary Offering
Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex
MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
Hyundai Motor India IPO: The Bull Case
POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won
MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up
Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex
CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
CK Infra (1038 HK): London Calling

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

ASICS (7936 JP): A US$1.4 Billion Secondary Offering

ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), A8 New Media (800 HK), Asia Cement China (743 HK).
Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP).

MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion

Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

Hyundai Motor India IPO: The Bull Case

Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion.
HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile.

POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won

POSCO Holdings (005490 KS) announced a major shareholder return policy to buyback and cancel nearly 2 trillion won worth of treasury shares from 2024 to 2026.
The company will cancel 5.25 million treasury shares representing 6.2% of outstanding shares (about 1.9 trillion won). It will also repurchase and cancel additional 100 billion won of shares.
POSCO Holdings has taken a major initiative to provide greater returns to its shareholders and this should have a positive impact on its share price.

MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

By Rikki Malik

While there may be still be some overhang once the rights shares start trading, this is a good entry point
Applications for 6.4 Billion excess rights shares received from 11 applications
Rights shares will start trading on Tuesday 16th of July

Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: ASICS Corp (7936 JP), Honda Motor (7267 JP), Kokusai Electric (6525 JP) placements; Sanil Electric (062040 KS) and Timee Inc (215A JP) IPOs.
Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Shanghai Henlius Biotech (2696 HK), Hong Kong Television Network (1137 HK), Rex Minerals (RXM AU), Second Chance Properties (SCE SP).

CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown

There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.

CK Infra (1038 HK): London Calling

CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
A UK-listing makes perfect sense. In excess of 90% of CKI’s FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
The wording in the announcement is unclear – a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.

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Jul 14

Most Read: Daidoh Ltd, ASICS Corp, Doosan Bobcat Inc, Hyundai Motor India , Kokusai Electric , Altium Ltd, Korea Stock Exchange KOSPI 200, MMG and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬
HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
ASICS (7936 JP): A US$1.4 Billion Secondary Offering
Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?
ASICS (7936) | Obadele Thompson or Usain Bolt?
Hyundai Motor India IPO: The Bull Case
Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric
(Mostly) Asia-Pac M&A: Second Chance Properties, Shinsung Tongsang, Rex Minerals, Canvest, Altium
EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY
MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬

Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too.

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

ASICS (7936 JP): A US$1.4 Billion Secondary Offering

ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

On 11 July, the Doosan Group announced a major business structure reorganization, including the delisting of Doosan Bobcat Inc (241560 KS).
In our view (over the next 3-6 months), these transactions appear to be value-destroying for Doosan Bobcat and Doosan Enerbility minority shareholders but positive for Doosan Robotics shareholders.
Doosan Robotics plans to acquire the remaining 54% stake in Doosan Bobcat through a tender offer. Once Doosan Robotics fully owns Doosan Bobcat, its shares will be delisted.

ASICS (7936) | Obadele Thompson or Usain Bolt?

By Mark Chadwick

ASICS is revising up its full year forecasts, now expecting sales to reach a record ¥660 billion , up 15.7% year-over-year. There is a strong currency tail wind.
Still “you gotta be in it to win it..” ASICS is currently crushing it, while Nike flounders
A large secondary offering will likely hit the share price in the short term; there are two key risks…but it could be a good opportunity to buy.

Hyundai Motor India IPO: The Bull Case

Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion.
HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile.

Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric

The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by Aisin (7259 JP) but moves have come fast and furious.
Apparently minorities are grumbling to the SFC about the low-balled Offer for Asia Cement China (743 HK). And for good reason. The best course of action? Vote against the Scheme.
Hanwha Corporation (000880 KS) is trading at a steep NAV discount. And the controlling family is making a partial Offer to gain majority control.

(Mostly) Asia-Pac M&A: Second Chance Properties, Shinsung Tongsang, Rex Minerals, Canvest, Altium

I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals discussed this week on Smartkarma: Second Chance Properties (SCE SP)‘s VGO,Shinsung Tongsang (005390 KS)‘s Tender, Rex Minerals (RXM AU)‘s Scheme, and Canvest (1381 HK)‘s possible Offer.
Key updates took place on Altium Ltd (ALU AU), Pacific Smiles (PSQ AU), Asia Cement China (743 HK), Shanghai Henlius Biotech (2696 HK), and Kfc Holdings Japan (9873 JP).

EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY

By Nico Rosti

The KOSPI 200 INDEX started a modest pullback and is entering a BUY area, but it could fall further this coming week, caution is advised.
The support levels to buy are between 383-371, this coming week.
Alternatively buy the Close, if the WEEKLY Close is negative, next Friday.

MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

By Rikki Malik

While there may be still be some overhang once the rights shares start trading, this is a good entry point
Applications for 6.4 Billion excess rights shares received from 11 applications
Rights shares will start trading on Tuesday 16th of July

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Jul 13

Most Read: Ryohin Keikaku, Fast Retailing, Doosan Robotics , Keisei Electric Railway Co, Daidoh Ltd, Shanghai Henlius Biotech , Pacific Smiles, ASICS Corp, Doosan Bobcat Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sep24 Nikkei 225 Rebal – Now 1 ADD, 1 DELETE; Fastie+TEL Still Where the Fun Is
Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬
Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
Henlius (2696 HK): Here Comes The Scrip Option
Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!
HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

Sep24 Nikkei 225 Rebal – Now 1 ADD, 1 DELETE; Fastie+TEL Still Where the Fun Is

The March 2024 rebal is done and dusted. When announced, there were 2 prospective DELETEs for Sep 2024. Now there is only one expected DELETE, Nippon Paper Industries (3863 JP).
The one likely inclusion is therefore Ryohin Keikaku (7453 JP). But there is more fun afoot with Fast Retailing (9983 JP) and Tokyo Electron (8035 JP).
The two stocks – of totally different sectors – interact somewhat, both in determining Nikkei 225 direction, and their relative potential selldowns.

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data

Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact.
New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
I expect the ask needs to change, and the agenda item needs to be difficult to be against.

JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬

Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too.

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion.
Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC.

Henlius (2696 HK): Here Comes The Scrip Option

Shanghai Fosun Pharmaceutical (Group) (2196 HK)‘s (SFP) “Merger by Absorption” HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
The first hurdle for the share option – valid letters of interest from those shareholders wishing to rollover – was secured yesterday. SCP still has the discretion on providing scrip.
But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.

Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!

After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share.
The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?